For all you self-managing landlords out there, how far is too far?

Question

I'm looking for a multi-family in an area thats roughly 1 hour away from where I live.  Initially, I want to manage the properties myself, until I get 2-3 properties under my belt to increase cash flow.

So, question is, is it reasonable to think that I could manage the properties from an hour's drive away, or am I being crazy?  They are fully rented by the way, so tenant screening/marketing is not an immediate concern at this point, but obviously will be in the future.

Elizabeth Jakso · Answer

Jim B, the company is SecurePayOne.com.  Linda Libratore is the owner.  Contact info is on the web site.

Mark Ainley · Answer

It all has to do with the neighborhood and tenants.  This is what our company does for a living and if it is class b minus or lower we take a pass unless we have someone local when it is that far.  Maintenance, collections, and oversight will wear you down.

Ciro LoCascio · Answer

I currently self manage 5 sfh' that are 3hrs away. Great team on the ground and strict tenant screening guidelines will save you many headaches.

Marcia Maynard · Answer

Our preference is to stay within two miles of our home, as we are very "hands on" with managing our residential rental property. If and when we grow our business to a size that warrants bringing in property management, we may look further out.

If we found a screaming deal that we could not pass up, we would consider it. It might mean adjusting our business model, but we are open to that.

Kenneth LaVoie · Answer

It's a tough call because if you're close by, like me, you probably forget the dozens of 2-3 minute tasks that you do, many of which really need to be done that day. A 2 minute task monday, another tuesday, etc. This is not the way it always is, but it can be.

I run a lawn care business where I'm always a little behind but I can personally generate $60-$70 per man hour with my time. My having to drive an hour for a quick fix would be a disaster for me, and would also countermand my reason for investing in RE -- to make money without eating up as much of my time.

That being said, if you have enough units in an area, and you have someone readily available to take care of things as they come up, it helps. I'd get the feedback of those that have been in this EXACT place before, not just experienced landlords. Unless we've gone down the exact path you're thinking of, our input is only semi educated musings.

Geetika Casmon · Answer

Jim,

I don't think it is a crazy idea to self manage the property until you get a few more properties but here are some things to consider with a property that is an hour away.

1) Condition of property - if the building is older you may possibly have more maintenance to consider versus something that is newer.

2) When there are minor maintenance calls, I often have a handyman to go over while tenants are home and fix the issue, I confirm with the tenants that everything is okay, and pay the handyman. There is no need for me to drive there. However, if the maintenance issue is an bigger one, I usually need to make several trips: Check it out myself first, meet someone to get an estimate, check progress of work if it is over multiple days, review final work, etc. prior to paying for the services. This can add up very quickly especially in Chicago where traffic can be a pain.

If there is a handyman you trust, you can sometimes just work with them so they can be available to you when needed (this may lesson the amount of trips you need to make if you can trust them).

3) Tenants - Based on prior experience with tenant, do the often report maintenance issues or minor things all the time? When I do tenant screening, I often ask about this to their previous landlords.

There are obvously more things, but hope this helps. Keep in mind, I would log your trips so that you can expense the mileage for your trips as a business expense.

Dawn Anastasi · Answer

How much do you love to drive?  Do you have contractor contacts in the area?

Bryan N. · Answer

@Jim B.

I want to be within 5-10 minutes from a rental.  I will even pay a higher price for a property in my radius.  In the end, the couple extra dollars is well worth the time savings for me. But, I also self manage.

Stephen E. · Answer

You seem used to long drives given the previous commute, but the $64,000 question is whether you can't find some good units closer to home. I keep mine no more than 20-30 minutes away. Think of the number of times you may have to be over there for maintenance, showings, collection and general tenant management. You could be spending hour after hour on the road. This could really reduce the hourly rate of return from your rental business per hour of your time invested. I like to keep my hourly rate as high as possible and if you think about the fraction of Profits / Hours there are only two ways to improve things: make more money or spend less time. I like to try a bit of both, but with an hour each way you are going to have to make quite a bit more money to justify this purchase.

John Thedford · Answer

Six of my properties are about 45 minutes to an hour away depending on traffic. I don't mind the drive. When I obtain a new property or am working with a new tenant that might involve LOTS of trips to and from the new property. Once the repairs are done and a new tenant in place hopefully I won't have to go nearly as often. Personally, I don't feel an hour drive is that bad. I used to commute to work almost an hour a day each way and that did get tiresome. Knowing that I won't have to make a trip every single day makes it OK. If your potential deal is a huge money maker then that would certainly affect your decision.

For all you self-managing landlords out there, how far is too far?

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